The Hottest ISA Funds

Chelsea Financial Services outlines the hottest ISA-eligible funds for the 2012-2013 year

Chelsea Financial Services 14 March, 2013 | 6:00AM
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This article is part of the special series, Investing with ISAs.

Morningstar's 'Perspectives' series features guest contributions from third parties such as asset managers, academics and investment professionals. The below article was written by Darius McDermott, the managing director at Chelsea Financial Services.

Equities are the Clear Winner

There has been a marked increase in risk appetite amongst ISA investors so far this year. This has meant equities have been the real winner this ISA season. According to our data, UK equity funds have remained the best sellers, capturing just under 30% of sales, but there has also been an increase in interest for overseas equities, with Asia ex-Japan being the most popular (10%) in this category, followed by global equities (7%).

The most interesting development has been that the Europe ex-UK sector has had more interest this year (with almost 7% of sales) than the global emerging markets sector (6%). In addition, North American equities, which are usually greatly under-represented in the portfolios of UK investors, attracted almost 5% of inflows. This follows a trend which began last year, but which has really taken hold this ISA season.

Meanwhile, just one fixed income sector has made it into the top ten best sellers (Strategic Bonds) and the amount invested in the asset class has fallen by a quarter from 20% of total sales last year to just 15% today.

The property and absolute return sectors have been shunned, attracting less than 1% of sales each, and the mixed investment sectors have seen less than 1% between them.

Best-Selling Fund Sectors for ISAs

Rank

IMA Sector

1

UK Equity Income

2

UK All Companies

3

Strategic Bond

4

Asia Pacific ex-Japan

5

Global

Just One Bond Fund in the Top Ten

When it comes to best-selling funds for ISA investments, the Invesco Perpetual High Income fund still tops the list. However, there is just one bond fund in the mix compared with three last year, and Asian funds have shot up the table with the Newton Asian Income Fund and the First State Asia Pacific Leaders Fund in the top five. There is also a US equity fund-- the AXA Framlington American Growth fund--for the first time in many years.

Top 10 Best-Selling ISA-Eligible Funds

Rank

Fund

Morningstar Analyst Rating

Fund Manager

1

Invesco Perpetual High Income

Gold

Neil Woodford

2

Invesco Perpetual Monthly Income Plus

Gold

Paul Read & Paul Causer

3

Newton Asian Income

Silver

Jason Pidcock & Caroline Keen

4

First State Asia Pacific Leaders

Gold

Angus Tulloch & Alistair Thompson

5

M&G Global Dividend

Silver

Stuart Rhodes

6

M&G Recovery

Gold

Tom Dobell

7

AXA Framlington American Growth

Bronze

Stephen Kelly

8

Artemis Income

Gold

Adrian Frost & Adrian Gosden

9

AXA Framlington UK Select Opportunities

Gold

Nigel Thomas

10

Liontrust Special Situations

Bronze

Anthony Cross & Julian Fosh

This article was written using fund and sales data that was collected on February 28, 2013, by Chelsea Financial Services.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Artemis Income R Inc2.21 GBP-0.50Rating
AXA Framlington American Gr R Acc GBP1,144.25 GBP-1.44Rating
AXA Framlington UK Select Opps R Acc3,809.10 GBP-0.52Rating
BNY Mellon Asian Income GBP Inc2.18 GBP-0.22Rating
Invesco Monthly Inc Plus UK Acc370.58 GBP-0.48Rating
Invesco UK Eq High Inc UK Inc317.98 GBP-0.59Rating
Liontrust Special Situations R Inc467.56 GBP-0.71Rating
M&G Global Dividend GBP A Acc413.01 GBP-1.11Rating
M&G Recovery GBP A Acc291.64 GBP-0.19Rating
Stewart Inv APAC Ldrs Sstby A GBP Acc8.75 GBP-0.32Rating

About Author

Chelsea Financial Services  is a firm of independent financial advisers and the first intermediary to discount initial charges on unit trusts and bonds, and later PEPs and ISAs.